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IntraFish Seafood Investor Forum: Full recap of the event
Major figures from the global seafood industry and investors gather in London for this year's IntraFish Seafood Investment Forum. Check back here for our live coverage of the event.
Wednesday, Nov. 30, 4.15 p.m. GMT
Analyst: Land-based salmon farming is coming -- but not quite yet
"Given the issues with sea lice, prospects for full on-land salmon production have never been better," said Alexander Aukner, equity research analyst at DNB Markets.
In terms of location, Nordic countries have an advantage: Denmark has the technology, while Norway is the farming hub.
So what is missing? Even with incredible technology that can be put everywhere, and experience, you need the confidence to know that volumes are sustainable.
"You need that confidence from the farmers," Aukner said.
DNB estimates land-based is coming, "not this year, but maybe in 2020."
Wednesday, Nov. 30, 4.10 p.m. GMT
Deutsche See: Don't want to play the discount game
Hartwig Retzlaff, CEO of German distributor Deutsche See, said his company has chosen to be a "value driver" in the market -- and doesn't want to jump on the discount bandwagon.
Discounters have done their bit to boost sales of fresh and chilled fish and seafood in the market, he said.
They "offer additional possibilities but traditionally the discount segment has price as its main feature. And that compared to other retailers is at a terribly low price level," he said.
Retzlaff suggested this can do a lot of damage to the image of fish in general.
"We don’t want to be part of this development," he told the audience. "We don’t sell by price but instead by adding value."
Wednesday, Nov. 30, 3.50 p.m. GMT
How to fix falling fish consumption in EU
Total volume sales of fresh fish and seafood is on the fall in western Europe, but there are things retailers and foodservice providers can do to change this, according to Anastasia Alieva, global fresh food industry director at Euromonitor.
Sales in western Europe declined from 5.99 million metric tons in 2010 to 5.88 million metric tons in 2015, while sales of processed fish and seafood also declined from 2.63 million metric tons in 2010 to 2.58 million metric tons in 2015.
On average, consumption was 11.9kg per capita in 2015.
Of the big five markets -- France, Germany, Italy, Spain and the United Kingdom -- which together account for 60 percent of total fresh fish and seafood sales in western Europe, Spain is seeing the largest declines at the moment, said Alieva.
“There has been a negative consumption trend 2010 -- 2015 and in the last five years fresh fish and processed seafood didn't perform well,” she said.
Although still the highest, consumption in Spain declined 16 percent and the only place recovered is UK, she said.
Moving forward consumption in the United Kingdom “will continue to do really well”, she said, based on promotions and campaigns in the country from retailers and brands.
Consumption in Germany, though, is destined to decline “significantly” in the next few years based on sustainability issues, while the country will become more focused on traditional meat products.
“France will also perform well in chilled seafood, but Spain will see another five years of bad performance,” said Alieva.
According to Alieva, to improve consumption, retailers and foodservice providers have to focus on improving availability; improve tastes and flavors; keep prices at affordable levels; highlight health benefits of fish and seafood, and educate consumers while at the same time keeping an eye on sustainability.
Wednesday, Nov. 30, 2.34 p.m. GMT
Cargill: Move into seafood industry the right one
One year after its move into the aquaculture feed sector with the acquisition of Ewos, US giant Cargill said it was the right step.
Einar Wathne, president of Cargill Aqua Nutrition -- who has been working in the industry for some 20 years -- said "it is very clear that the seafood’s value chain is of high interest at Cargill, and is a key area where we should develop."
In the task to tackle one of the most critical needs of the aquaculture industry, the implementation of alternatives for feed ingredients, Cargill has some "interesting developments that would be significant in the coming years."
One of the group's main benefits is its presence in different industries and markets, which allows them to transfer knowledge and experience between the sectors.
For example, Cargill is making good progress in shrimp feed thanks to its knowledge on the salmon industry, Wathne said.
The ambition for the next years is to grow in warmwater species producing countries.
Wednesday, Nov. 30, 2.26 p.m. GMT
Mass consolidation still a way off -- but will happen
Large scale consolidation in the seafood industry is still a way off but will most likely happen eventually, according to Ole-Eirik Leroy, chairman of Marine Harvest.
“Both Norway and Chile are still quite fragmented but in the long run consolidation will happen, and both will continue on that plan,” he said during a panel on ‘Growth’.
According to Leroy, in Norway at least, the hold up is because it’s just too interesting to stay in the business.
“I don’t know anyone who is for sale right now -- even without that, price expectations for assets are extremely high. It’s best to increase organically or improving what we are already doing today.”
Rúni Hansen, chairman of the board at Bakkafrost, said consolidation in the Faroe Islands had already taken place and now the goal is about vertical integration.
“Return on investment is higher on this strategy than in going abroad or acquiring other companies,” he said.
However, if pushed Bakkafrost has “a better appetite to eat than be eaten.” It is more about finding the "best timing and the best target."
Wednesday, Nov. 30, 12.55 p.m. GMT
Marine Harvest: Staying true to your roots
Salmon giant Marine Harvest has its fingers in a lot of pies. The company is now a prime example of a vertically integrated seafood operation.
However, while its feed and processing segments are important pillars of its operations, the group will stay true to its origins, Ole-Eirik Leroy, chairman at the group, told the audience at today’s forum.
“We are both in feed, in secondary processing, sales and marketing but there’s nothing that comes before actual salmon farming,” he said.
"It’s the area where we invest most of our money and it will remain our top priority in the years to come."
The majority of investments currently go into the development of its freshwater sites for smolt production, Leroy said.
In addition, it applied for four different new development licenses in Norway, and Leroy said he hopes all will get approval by the country's government.
Wednesday, Nov. 30, 12.21 p.m. GMT
Controlling sea lice, reducing costs
"In Shetland we have some problems related to sea lice and algae but at least you can plan ahead,” Andreas Kvame, CEO Grieg Seafood, told delegates at the IntraFish Investor Forum.
In the third quarter of this year, Grieg reduced sea lice levels using cleaner fish.
The company has been struggling “quite hard, that is no secret,” but its new strategy to reduce the salmon production time from 24 months to 18 months, is reducing the risk by around 25 percent.
"You get bigger and stronger fish in the sea, although you still need to monitor algae and other issues," Kvame said.
During quarter three, the company managed an EBIT of NOK 15.90 per kilo.
"Looking ahead, I think Shetland will be a good place to produce salmon," Kvame said.
Wednesday, Nov. 30, 12.10 p.m. GMT
Salmon's future growth will be offshore
As number of new development licenses are considered in Norway, the feeling is the future lies with offshore farming rather than onshore, according to a panel on 'The Future of Salmon.'
The licenses are aimed at boosting innovation and finding new ways to farm, but also to increase production.
"It will take some time, some will fail, but also some will most likely bring the industry forward," said Andreas Kvame, CEO of Grieg Seafood.
Charles Hostlund, CEO of Norway Royal Salmon, said if the industry is to grow it should be offshore, as the technology makes it possible to produce in new areas.
“It will take time, but going forward we think offshore is better than onshore,” he said.
Hostlund questioned why closed containment or land-based systems should be used when available land is already scarce. “Why should we produce the fish on land when we are harvesting too little from ocean already,” he said.
Both Hostlund and Kvame believe the region most exciting for sustainable growth over the next decade will be Norway, and the new technology will be based offshore.
Ricardo García, CEO of Camanchaca, however, said in Chile growth will not come from new technologies or systems, but rather from better utilizing the infrastructure and licenses it already has in place.
“Chile is still a growth area, we are currently only using a third of the approved licenses so on paper Chile could triple production with new licenses,” he said.
In Chile, the focus for now is on growing sustainably, with more attention on the environment, health and biology.
“We have great potential on existing technology to do better what we already do, there is an enormous potential with existing licenses, so we need to overcome challenges and develop creative solutions first.”
García estimated the industry in Chile should double production in next 10 to 20 years, but in a much more sustainable manner.
“There is a huge number of things to do before we consider offshore or on-land, for example look at first increasing size of smolt.”
Wednesday, Nov. 30, 11.10 a.m. GMT
Norway’s salmon industry may have the biggest growth potential in the north, namely Finnmark, Charles Hostlund, CEO of Norway Royal Salmon, said.
It has a stable biological environment and “steady production costs,” he said.
Norway Royal Salmon currently has 29 production licenses in the area.
In addition, the company recently acquired a 50 percent stake in Iceland’s Arctic Fish -- and Hostlund is seeing a number of similarities between the two countries.
However, temperatures are lower in Iceland in the winter, he said, which means smolts will have to be bigger to “avoid a second winter in the sea."
Arctic Fish is currently investing in a new hatchery, which will have a capacity of producing 7 million smolt with a size of about 300 to 500 grams each.
Wednesday, Nov. 30, 10.52 a.m. GMT
Chile: Back on track
The Chilean salmon sector is back on track after a chequered history featuring disease outbreaks, market problems and natural disasters.
In recent years, the industry has faced devaluation in the main markets, a volcanic eruption, El Nino, an algal bloom -- which saw 100,000 metric tons of harvestable product lost in 30 days -- and the red tide which also resulted in unfounded but “severe reputational problems” for the sector.
However things are looking up, according to Ricardo García, CEO of Camanchaca.
The various “external shocks” obviously meant EBIT per kilo suffered as a result but this is heading back up towards $1 per kilo in this quarter.
Costs are also back on track for Camanchaca, which increased from a low of $2.92 per kilo in Q4 2015 up to $3.75 per kilo in the first quarters of this year. But this is back to $3.09 per kilo now.
Market caps also suffer, but these too have been recovering in last six months -- Camanchaca doubled the price of stock in last six months.
There is also evidence in the recovery of prices which are up 70 percent since Q4 2015.
Weather conditions are normalizing, El Nino is over, while there have been a number of “breakthroughs” in terms of pharmaceuticals with new vaccines and anti parasites, with products being trialed from Pharmaq and Elanco.
More importantly, the country has new regulatory requirements which should force players to be more efficient and focus more on health, biological factors and improve environmental conditions.
Wednesday, Nov. 30, 10.20 a.m. GMT
Keep it simple
“A good storm and a crisis is a good position to start” in order to return stronger, Bakkafrost CEO Regin Jacobsen told the audience at today’s forum.
Since the Faroese ISA crisis between 2001 and 2004, the country’s salmon producers have made "reducing risks" their mantra.
Stricter farming regulations, fewer players and a focus on reducing biological risks meant a stronger return from that crisis.
The result is a premium salmon, also in terms of prices. Since 2008, prices have been higher than Norwegian ones, and for the last two years it was about €1 per kg.
“It’s very simple,” Jacobsen said. “Keep the cost low, keep the market price high.”
For Bakkafrost this means investments throughout the whole supply chain -- from feed to smolt, from processing to new product development, Jacobsen said.
Wednesday, Nov. 30, 10.07 a.m. GMT
Salmon's new normal
There is a paradigm shift happening in the salmon market, according to Dag Sletmo, senior corporate analyst at DNB, whereby high margins and high multiples is the new norm.
Historically the salmon market has been volatile, but for the last three to four years things have changed.
“The new normal in salmon is about high margins and high multiples -- farewell to the traditional cyclical pattern, since 2015 it has jumped up.”
According to Sletmo the new normal salmon price will be around NOK 40 per kilo in the road ahead.
However this change is not just a “super cycle” but a paradigm shift, Sletmo said.
"The challenge is we know way more about supply than we do about demand -- there is a lack of data, it is more complicated, but with lower supply volatility we need to spend more time trying to understand this dynamic.”
In the road ahead, volume growth will come back due to innovation; sustainability will be more important; there will be bigger and more integrated companies; while there will be increased relationships between producers and retailers while branding will be increasingly important.
"Growth is driven by price not volumes,” said Sletmo. High prices means profitability is high, and so are incentives to come up with more sustainable ways of doing things.
Additionally, regulatory and technological innovation will bring growth, said Sletmo.
Development licenses will be awarded for more solutions such as offshore farming, closed systems, and land-based farms.
There will also be a number of new players and genetics will start to catch up with other animal production.
Wednesday, Nov. 30., 8.15 a.m. GMT
IntraFish invites the seafood world to London
Major players in the global seafood industry as well as the investment community are once again gathering at the Four Seasons Hotel in London, United Kingdom, this Wednesday, to explore opportunities and arguments for investment in the global seafood industry.
Over the course of the day, several high-ranking executives from seafood companies and investment firms will shed some light on why now is a perfect time to invest in seafood.
Speakers and panelists include Ricardo García, CEO of Pesquera Camanchaca; Hartwig Retzlaff, CEO at Deutsche See; Anastasia Alieva, head of fresh food research at Euromonitor International; Charles Hostlund, CEO of Norway Royal Salmon; Regin Jacobsen, CEO of Bakkafrost; Ole-Eirik Leroy, chairman of the board at Marine Harvest; Andreas Kvame, CEO at Grieg Seafood; and Einar Wathne, president and group leader of Cargill Aqua Nutrition.
Dag Sletmo, senior corporate analyst at DNB, is the day's keynote speaker.
IntraFish Seafood Investor Forums, held twice per year in New York City and London, have drawn the biggest names in the seafood industry and investment community.
Among the panel topics in London this year:
- Farmed salmon: Where next?
- Models for Blue Growth: Integration, diversification and value-adding
Make sure you keep checking back here for rolling coverage from all the different speakers and panel discussions taking place during the day.